Doing Business In Australia Economics Essay

Drumhead

This file has for chief end to analyse hazard factors of Australia. We have conducted a survey of legal, political, cultural and fiscal hazards. Australia is the fifteenth largest economic system in the universe[ 1 ]. Australia ‘s GDP is one of the highest of all states and services take a major portion in it with 70 % of the GDP. United States of America are one of Aussie ‘s major spouses and are stand foring the largest investor. We have seen that jurisprudence of Australia is different to the others due to its common jurisprudence. Australia is besides a state really stable in term of politic and it is an chance to catch for companies. This is furthermore, the state with the lowest hazard of political instability rated to 9.24[ 2 ].

Australia is proposing many chances to come in its market for foreign companies in immense acting sectors as the aircraft industry, electrical, vehicles, pharmaceuticalaˆ¦

We have seen that to win in such a market, being present on a local degree is better. One of the best ways of come ining this market is to engage an agent. Another manner is to hold a partnership or a subordinate working with a local distributer who already knows the market. In another manus, being present in Australia allows a company to hold a secured place in a state with “ lower hazards ” and utilize the state as a base to make Asiatic markets more easy. This is the instance for European companies for illustration.

In this file, we considered many options available to come in the market with partnerships, acquisitions, joint-venture or trade.

Introduction

This study has for nonsubjective to set-up a study covering with the different hazards in footings of politic, cultural, legalaˆ¦ in order to construct a concern in a specific state such as Australia. Furthermore, we are traveling to discourse about the most appropriated schemes for a company to come in Australian market sing the hazards we are traveling to analyse. International jurisprudence is specific to each state.

In all concern, every company has to see the jurisprudence enrolled in the state they want to come in. In fact, you can non come in a state without analysing its environment. A company has to accommodate itself, its merchandises and maybe its policies merely to hold rights to tap on this market. There are many organisations that govern trade. If the state is member of the WTO ( World Trade Organization ) , it gives an added value to the state which means that it ‘s opened to foreign companies. In order to develop their economic systems, states are suggested to sign conventions, signed understandings and being member of organisations. Import and Export are two cardinal factors in order to develop the economic system of a state. USA, China and Germany are the best illustrations of success in these elements.

Australia is the 14th largest exporter in the universe[ 3 ]and the company is present in many organisations. This is a turning state, already developed state with many high outlooks in footings of concern. More and more companies are taping the Australian market and the figure of people coming to get down a new life or new concern in the Oceania ‘s state is increasing.

After analysing the state ‘s chances and menaces for making concern, we are traveling to analyse the different methods for come ining the Australian market. It exist many market entry schemes as joint-venture, partnerships, acquisitionsaˆ¦ It can be besides a direct exportation to a local distributer or more merely being present in the state thanks to a subordinate. There are market chances which are truly more concrete for precise sectors as aircraft industry.

Finally, we can speak about the geographical state of affairs of Australia which is doing some issues to companies. In fact, the propinquity to the Chinese market is an issue for other states. They need to happen a solution to export in Australia expeditiously in order to confront the low cost of Chinese exporters.

In a first measure, we are traveling to show an overview of the state and develop its international jurisprudence and eventually show their hazards to take in consideration. In a 2nd measure, we are traveling to discourse about the signifiers of international concern used to come in Australian market and all outlooks that can hold a company via trade, foreign direct investmentaˆ¦

Potential hazards to see for making concern in Australia

Australian Overview

We need to give foremost an overview of the state economic state of affairs to expect the hazards. Australia is the 13 ‘s largest economic system of the universe. The economic system was increased and the quality of life is besides increasing. Furthermore, the growing of China is giving more recognition to the Australian growing. Geographically speech production, China is good positioned for dealingss and import-export with states as Australia.

Australia has a population of about 20 million people. The national linguistic communication of Australia is English due to the settlements from Britain. It is one of the best criterions of life and it delivers chances to concerns.

SWOT Analysis[ 4 ]

Strengths

Failings

State with a regular and unafraid political system

Competitive advantage in footings of assortment of sections

Trouble to use regulations and policies for the parliament

Hazard of migration making issues of problems in the state

Opportunities

Menaces

Strong place and relationship with USA

China ‘s turning economic system is increasing the concern between the two states

Main menace comes from the currency rate which is submitted to fluctuations

This SWOT analysis is an overview of Australia and it allows holding the chief points in footings chances and strengths for companies to make concern in such a state.

Legal Risks

Australia has a common jurisprudence. This common jurisprudence is build from the English 1. The chief jurisprudence is the Constitution of Australia. It is the manner that Australia is directed and it builds the authorities of the state. To explicate in few words, Australia is separated in States and each State is governed by its ain legal power. It consist that Torahs edited by the parliament and it help to take concrete determinations where the Torahs are themselves non precised. Common jurisprudence is non stiff but it is non ever the best solution to issues.

Furthermore, Australia ratified a pact called AUSFTA which means Australian & amp ; United-States Free Trade Agreement. This free understanding allows the suppression of duties barriers and offers new chances for companies to make concern between Australia and the United States of America.

The state has ratified the CISG ( Convention on Contracts for the International Sale of Goods ) . It is made in order to minimise legal hazards that Australian companies can run into concerning exchanges on import-export. It was signed 12 old ages ago in 1988[ 5 ]by the United Nations.

Refering the WTO ( World Trade Organization ) , Australia is a member since January, 1st 1995. As we know, WTO is an organisation assisting the exchanges of goods and services between states. This a cardinal factor of success for Australia in order to make concern abroad. It a aboriginal factor of canceling or cut downing the chief revenue enhancements, duties barriers modulating different states to export. It helps the trade trades and is made besides in order to protect each state ‘s involvements and decide issues go oning between states from several states.

It is indispensable to precise that Australia was involved by many differences and issues with another state as with United States or Uruguay for the last 1. In these instances, WTO was in charge of deciding the issues. It gives more recognition to a state for puting on it and for Australia this is merely a attendant chance.

WIPO, World Intellectual Property Organization is once more created by the United Nations and is made in order to make a protection and advance it around the universe. This organisation delivers different patents, conventions protecting trade name names, merchandises or hallmarks. This jurisprudence reinforces the protection of different states in footings of economical factors. Australia is one of its members since 1972[ 6 ]. Furthermore, there was an understanding between the WTO and WIPO to increase cooperation between states to assist chiefly developing states. As you can see below, Australia own one of the most secured rational protection.

Intellectual Property Protection, A 2009

State

Score1,2

Singapore

6.2

New Zealand

6.0

France

5.8

Australia

5.8

Germany

5.7

United States

5.4

Japan

5.4

United Kingdom

5.3

Hong Kong SAR

5.3

Taiwan

5.0

Malaya

4.5

Korea

4.2

China

4.0

India

3.6

Dutch east indies

3.5

Siam

3.3

Philippines

2.9

Beginning: A The Global Competitiveness Report, 2009-10, World Economic Forum

Political Hazards

Australia is a state really politically stable. In fact, the hazard is really low and is sing as the lowest of the universe as you can see below:

Hazard of Political Instability, 2010A

State

Rating

Australia

9.24

Singapore

8.78

New Zealand

8.76

Germany

8.49

France

8.46

United States

8.16

Hong Kong SAR

7.49

United Kingdom

7.41

China

7.12

India

7.08

Malaya

6.90

Taiwan

6.42

Korea

5.72

Japan

5.40

Dutch east indies

4.94

Philippines

3.50

Siam

1.75As we can see Australia has the better ratio in footings of instability of its political system. With 9.24, Australia is stand foring the lowest hazard of all major states for foreign investors. This is a chief component in order to set up an entrance scheme for a company. This is one of the ground which for we chose Australia as state because this is one of the greatest chance today. It represents security and a secured plat-form for foreign companies.

Footnotes:

1: 0 = really high, 10 = really low

Beginning: The IMD World Competitiveness Yearbook, 2010, Switzerland, A www.imd.ch/wcy.

The authorities:

Australian authorities is at the fourth topographic point refering the efficiency[ 7 ]. There are two types of authoritiess on a national and a local degree.

Australia ‘s authorities is known as Commonwealth. This is a constitutional monarchy which is divided in 3 chief subdivisions. First is the parliament which has to elect and choose the different Torahs for the establishment. Second is the executive which apply straight the Torahs. Finally is the bench which is independent. This chief legal power has to implement the Torahs and is directing the two others legal powers. It is a manner for Australia to avoid corruptness and problems in the state. We can state furthermore, that the system is really strong and the enforcement jurisprudence allows keeping it.

Cultural Hazards

Refering the cultural facet, Australia is good positioned for foreign concern. In fact, there are no linguistic communication barriers because Australia is a colonised Britain state. Furthermore, the long dealingss they have with the United States of America reinforce their credibleness. It is a state where it is really practical and easy to negociate, make concern and pat on the market.

Furthermore, as we said before, Australia is politically really stable as a state and presents, it represents the lowest hazard in the universe to put in. This is a cogent evidence that Australia is out of corruptness or grafts issues. Australia owns a specific jurisprudence and organisation related to take attention of any foreign graft. This establishment is in charge of the countenances, determinations and Torahs established to contend this issue coming on a first clip from China which has a major function in Australia.

Fiscal Hazards

First, we can state that Australia has a really stable economic system ; the state is one of the most developed states of the universe. This economic system is more and more stable thanks to the developing Asiatic markets and its strong relationships with Japan and United States. The GDP growing is positive since more than 15 old ages with more than 3 % addition per twelvemonth.

This is the lone state of the universe which is besides a continent and it gives many resources to export. The Australian “ concern theoretical account ” is like western states. It means that services take the largest portion in the economic system. In fact, they represent more than 70 % of the GDP[ 8 ]. The state is known for its quality of life. This is the sixth state ranking for quality of life and it is a cardinal factor for many people coming to populate in Australia. Therefore, the market is developed but it is besides in continual development.

We have seen the different hazards and factors present in Australia by analysing them in different parts with legal, political, cultural and fiscal hazards. Now, we are traveling to discourse and develop the signifiers of schemes to come in the market.

Adapted schemes to come in Australian market

There are many chances to tap on a specific market. Australia is one of the greatest chances for many foreign companies to set up their ain concern. In fact, the state is one of the most secured of the universe.

Overview of the competitory market

Australia is a state with much strength. The state is known for its quality of goods, the labour sector and its efficiency on legal Torahs.

The liberalisation of goods and free trade understanding are stand foring a strong competitory advantage for such a state. In fact, Australia has Free Trade Agreements with the United States and south Asiatic states. Furthermore, this understanding could be developed and extend to other states with China, Japan, India and South Korea.

The state ain already many companies and trade names present since a long clip and it remains strong relationships. Furthermore, the propinquity from Asiatic markets and the turning economic system of China represent a failing and a menace for European and American companies. They can non confront the low costs.

Schemes to tap on Australian market

There are different issues and information that we need to reply. Are we traveling to a short or long-run scheme? Are we traveling to set up a construction in the state? Are we traveling to engage local employees? Will production be in Australia or remain at a national degree? Are we traveling to engage an agent, work with providers, partnersaˆ¦ ?

Sing to the legal hazards we analyzed, there are organisations present in Australia to see. FIRB, Foreign Investment Review Board is taking attention of each foreign investing and provides general information on Australian policies and Torahs.

In order to tap on the market, there are already known success ways. Local gross revenues construction if required many times to win. It can be done with an agent or a local distributer.

The methods to see:

The chief signifiers of concern to see are:

Agent or distributer

Licensing and transportations

Joint ventures

Alliances

Subordinates

Exclusive bargainers Policies are modulating this type of concern. There are regulated by the Commonwealth authorities. The investings are more controlled and minimized. The determination to take such a type of concern agencies that the others as joint-venture are reduced.

Australia is one of the 10 most attractive states in footings of foreign direct investing. The approximative sum of the investings is about $ 2 trillion. The growing in 5 old ages is about 65 % .

The signifiers we have here are the most common used in Australia. Why? The signifiers of concern used in Australia are similar to the 1s used in USA. It is really basic to set-up a concern in Australia. It can be thanks to a partnership with local distributer, . Subordinates, partnerships, joint-venture, or agent representative are besides common concern signifiers used.

Sing the legal jurisprudence of Australia, each foreign company based here is straight registered as an Australian 1. Furthermore, the ASIC, Australian Securities and Investments committee which is in charge of the enrollment and securities refering the ordinance of each company. They control of the company is replying to all norms.

Legal jurisprudence and the Corporation Act in Australia shows many demands for a foreign company. In footings of security, a physical presence in Australia is better. In fact, Australia and its chief metropolis Sidney is a immense Hub, a plat-form helping to make the local market but besides as a lever of dealing to the Asiatic markets. That is why it is indispensable for a foreign company to set up itself in the state thanks to a subordinate or thanks to an alliance-partnership to hold a better cognition of the market. This is the unafraid degree of legal hazards that we have seen which can take to these schemes for come ining the Australian market. So, in general, foreign direct investing is the best manner due to the secured state.

The concluding chief hazard that a foreign company can hold in Australia is related to common criterions. The state is divided in States and each State has specific Torahs and the authorities is non so precise about the rules and regulations to which are capable companies. Companies are besides under the legal power of a chief organisation, ACCC ( Australian Competition and Consumer Commission ) which used the Trade Practices Act in order to command investings which can possibly take to a concentration in a specific sector.

In such a state regulated and secured of all corners, foreign investings are taxed by the authorities and have to esteem many norms for illustration like environment Torahs. The authorities has to repair a bound of foreign investings because in term of local economic system, foreign companies are taking the power.

Decision

Thankss to this instance survey, we analyzed the different hazards that we have to confront in Australia. Implementing a new scheme and taking a signifier of concern to tap on a market is really hard and must be a reflected determination.

Australia is one of the most secured states of the universe. Foreign investings are turning up and all companies are turning themselves to this state to win. In fact, Australia offers guarantees but it is besides a plat-form, as a Hub to make the Asiatic Market in footings of geographical state of affairs. This is the vision chiefly for western states and companies as European companies.

Australia has however some issues that companies have to face. Commonwealth and common jurisprudence are regulated the state. The economic system of the state is good entertained but an issue is coming from inside the state. National companies are non so enjoying foreign investings because they are taking the power and the Australian authorities has to repair more and more limitations, duties barriers to restrict the figure of investings. We can restart the chief legal hazards. There is the hazard of “ foreign company independency ” . This is the hazard that a Chinese company for illustration takes the monopoly in Australia. There is the “ application to common jurisprudence ” . Chinese companies ‘ for illustration are doing problems because of their aims. We can non be certain of what they want to make. They have in effect to be observed and analyzed. There is the “ revenue enhancements and policies ” issue. All company has to esteem Commonwealth but besides each State regulations which are differing from each other.

In another manus, we have seen thanks to artworks from official beginnings as the Australian authorities web site, that Australia is member of the WTO ; the CISG was ratified by the state. For the rational protection and the confirmation of WIPO, Australia is one of the best states of protection.

This is the state with the most stable political hazard and the lowest one so it shows a certain security for foreign companies thanks to a strong authorities and a common jurisprudence footing coming from the Britain 1.

Finally, we have seen that FDI are the most interesting signifier of concern to develop in Australia thanks to confederations or a subordinate in the state.

Recommendations

There are two types of recommendations to do. One is for the state, Australian authorities which has to confront its ain issues. The 2nd is for foreign companies wishing to set-up a concern in Australia.

Refering the state, as we saw it is a good secured state with a high quality of standard life. The chief job is the economic system coming from the local beginnings. In fact, foreign companies are taking the power and it is hazardous for local manufacturers. The state has to restrict and cut down the figure of investings in order to keep the local companies. Furthermore, there are the issues from China. Chinese companies are doing problems. In fact, the turning 2nd economic system of the universe is developing itself in Australia but it is besides a hazard to be touched by the corruptness and counterfeiting which are really present in China. In order to avoid this issue, the authorities needs to do limitations and control in topographic point to verify each company sing the nature of its aims.

In another manus, there is the recommendation for the companies set uping themselves in Australia. After the analyze we made in the file, we can state that FDI are the most common and secured manner to put in the state. Bing present physically in the state thanks to subordinates or by doing confederations is besides a manner to hold a better cognition of the state and to make the turning markets of Asia.